most- state bank of india - group- best placed for economic recovery_ enviable sa franchise_...

8/12/2019 MOSt- STATE BANK of INDIA - Group- Best Placed for Economic Recovery_ Enviable SA Franchise_ Adequate Capitali…

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Alpesh Mehta ([email protected]); +91 22 3982 5415

Sohail Halai ([email protected]); +91 22 39825430

28 March 2014

Update | Sector: Financials

State Bank of IndiaCMP: INR1,840 TP: INR2,175 Buy

Best placed for economic recoveryEnviable SA franchise I Adequate capitalization I Dynamic management

Enviable liability franchise (SA ratio of ~35%), adequate capitalization

(tier-I of 10% post recent equity infusion), and lowest net stress loans

(6.7%) position SBIN as best placed to benefit from an upturn in the

economic cycle.

Core operating profitability is likely to bottom out in FY14, as initiatives by

the new management would lead to higher fees and fall in overhead

expenses. The new Chairperson has outlined four key focus areas - NIM,

operating leverage, NPA, HR - to improve core profitability.

SBIN has underperformed the Sensex and Bankex by 29% and 22%,

respectively over last one year due to weak macro environment and fall in

profitability. With the economy bottoming out, we expect a stock re-

rating. We reiterate Buy and roll over our target price to FY16 to INR2,175

(0.9x FY16E consolidated BV + INR120 for Insurance).

Unmatched SA franchise; SA ratio to remain best in class

Strong expansion over FY09-13 has helped SBIN to strengthen its foothold

in the SA market. Despite deregulation of SA rates, SBIN’s SA growth has

remained in line with or better than industry. SBIN group market share inSA across rural, semi-urban and metro locations remains 25%+. In semi-

urban locations, it remains the undisputed leader, with ~38% market share.

Better product offering, superior technology of private banks and lack of

focus by the management had led to a sharp drop (10%+ across locations)

in SBIN’s CA market share. The new management is focused on improving

its CA wallet share, leveraging its corporate relationships.

Net stress loans among the lowest

Historically, SBIN has been conservative in terms of NPA recognition. Its net

stress loans remain one of the lowest among state-owned banks (PSBs) at

6.7%. Net stress loans for PNB, BOB, BOI and CBK stand at 12.4%, 7.9%,

6.3% and 8.8%, respectively.

Over FY04-09, recoveries and upgrades as a percentage of opening GNPA

stood at 33%, which further improved to ~40% over FY10-13. Due to sharp

moderation in economic growth, this ratio has moderated to 25%

(annualized) in 9MFY14. While our estimate for the full year is ~27%,

bottoming out of macro-economic issues can provide strong upside to ABV

and earnings.

Sensitivity of NIM and credit cost to return ratios is high. With a 10bp fall in

credit cost and 10bp improvement in NIM, RoA / RoE will improve by 11bp/ 180bp+, and earnings will see an upgrade of 18%.

BSE Sensex S&P CNX

22,214 6,642

Stock Info

Bloomberg SBIN IN

Equity Shares (m) 746.6

52-Week Range (INR) 2,469/1,453

1, 6, 12 Rel. Per (%) 16/-1/-29

M.Cap. (INR b) 1,371.5

M.Cap. (USD b) 22.8

Shareholding pattern (% )

As on Dec-13 Sep-13 Dec-12

Promoter 62.3 64.1 61.6

Dom. Inst 17.9 18.2 17.2

Foreign 11.5 12.1 12.3

Others 8.2 8.4 8.9

Stock Performance (1-year)

Investors are advised to refer through disclosures made at the end of the Research Report.



State Bank of India

28 March 2014 2

Dynamic management at the helm of affairs

The new Chairperson, Ms Arundhati Bhattacharya has outlined four key

focus areas (NIM, operating leverage, NPA, HR) to improve the bank’s core

profitability.

Our recent interactions suggest that the management is aggressively

focusing on improving employee and branch productivity, and controlling

overhead expenses, the benefits of which are likely to be realized with a lag.

Ms Bhattacharya’s longer tenor (three years) and willingness to moderate

growth to improve return ratios is a key positive, in our view.

Healthy earnings growth; adequate capitalization; reiterate Buy

SBIN recently raised INR100b, which led to an improvement in its CET1

capital to ~10%, one of the highest among the large PSBs. In our view,

current capitalization is sufficient to take care of 12-18 months’ growth

requirement. One of SBIN’s key strengths is its ability to maintain high share of core

income, led by higher NIM (due to high SA ratio) and relatively higher share

of fees (as compared to peers). In FY14, we expect core PPP to bottom out,

as initiatives by the new management will lead to higher fees and decline in

overhead expenses. Employee expenses are on the higher side due to one-

off provisioning for pension and wage hike.

Higher than expected net trading gains and decline in credit cost can

provide upside to our earnings estimates. We expect SBIN to achieve

earnings CAGR of 18% over FY14-16, one of the highest among PSBs.

One-year forward P/BV

0.9

2.3

1.2

0.60.3

1.1

1.9

2.7

M a r -

0 4

J u n -

0 5

S e p -

0 6

D e c -

0 7

M a r -

0 9

J u n -

1 0

S e p -

1 1

D e c -

1 2

M a r -

1 4

PB (x) Peak(x) Avg(x) Min(x)

Source: Company, MOSL

RoE bottomed out; gradual recovery in asset quality (%)

0.0

1.0

2.0

3.0

4.0

5.0

10.0

15.0

20.0

25.0

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4 E

F Y 1 5 E

F Y 1 6 E

RoE NNPA




State Bank of India

28 March 2014 3

Unmatched SA franchise; SA ratio to remain best in class

SBIN is the only PSB that has been able to retain its market share in SA deposits

at 29% since FY94, even post the emergence of private banks. Other PSBs lost

market share at a pace of 1% each year since FY00, that is, a cumulative loss of

13%+ market share in the last 13 years.

SBIN group market share in SA across rural, semi-urban and metro locations

remains at 25%+. In semi-urban locations, it remains the undisputed leader,

with ~38% market share.

Further, the strength of SBIN’s liability franchise was tested, when SA deposit

rates were deregulated. However, strong expansion over FY09-13 and a strong

brand has helped SBIN to strengthen its foothold in the SA market. SBIN’s SA

growth has remained in line with or better than industry.

However, its positioning in CA is weak, Better product offering, superior

technology of private banks and lack of management focus led to a sharp drop

(10%+ across locations) in SBIN’s CA market share. The new management is

focused on improving its CA wallet by share, leveraging its corporate

relationships.

Overall, SBIN has been able to maintain a strong CASA ratio of 40%+, which also

gives it a funding advantage, allowing it to keep its base rate low and attract

quality borrowers.

Resilient market SA share amidst different cycles (%)

63.5

49.2

29.0 29.8

5.0 18.5

F Y 9 4

F Y 9 5

F Y 9 6

F Y 9 7

F Y 9 8

F Y 9 9

F Y 0 0

F Y 0 1

F Y 0 2

F Y 0 3

F Y 0 4

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

SBIN Nationalized Private


Holding SA share in urban areas, gaining traction in rural (%)

23.4

26.2

38.1 38.4

24.2

23.7

F Y 0 0

F Y 0 1

F Y 0 2

F Y 0 3

F Y 0 4

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

Rural Semi-Urban Urban


SA ratio improving (%)

20 21 22

25 26

30 30 29 27

3235 35 35 34

F Y 0 1

F Y 0 2

F Y 0 3

F Y 0 4

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4 E


SA growth remains strong despite higher base (%)

15.2 17.0 17.8 17.8 17.9 20.6

34.2 36.6

46.3

C B K

P N B

B o B

U N B K

B o I

S B I N

H D F C B

I C I C I B C

A X S B

CAGR (FY03-13)


SBIN able to retain SA

deposit market share at

~29% since FY94 even post

emergence of private banks

Strong presence in semi-

urban areas; gaining

traction in rural region

Significant drop in CA

market share; expect

renewed focus to stall the

declining trend



State Bank of India

28 March 2014 4

CA market share has dropped significantly (%)…

37.4

19.1

50.8

43.8

5.4

26.8

F Y 9 4

F Y 9 5

F Y 9 6

F Y 9 7

F Y 9 8

F Y 9 9

F Y 0 0

F Y 0 1

F Y 0 2

F Y 0 3

F Y 0 4

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

SBIN Nationalized Private


…resulting in continuous drop in CA ratio (%)

1716 15 16 15

18 19 18

15 15

14

9 98

F Y 0 1

F Y 0 2

F Y 0 3

F Y 0 4

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4 E

CA Ratio (%)


Net stress loans one of the lowest; economic recovery can provide delta

The challenging economic environment has led to stress addition in the balance

sheets of PSBs, including SBIN.

SBIN’s conservative approach led to higher NPAs than restructuring. Hence, the

percentage of restructured standard loans for SBIN is 3.4%, against 4.6-9.6% for

peers. Consequently, SBIN’s net stress loans are also one of the lowest within

PSBs, at 6.7% (PNB: 12.4%, BOB: 7.9%, BOI: 6.3%, CBK: 8.8%).

With improvement in the economic environment, there should be an increase in

recoveries. Over FY04-09, recoveries and upgrades as a percentage of opening

GNPA stood at 33%, which further improved to ~40% over FY10-14E.

Due to sharp moderation in economic growth, this ratio has moderated to 25%(annualized) in 9MFY14. While our estimate for the full year is ~27%, bottoming

out of macro-economic issues can provide strong upside to ABV and earnings.

Net slippages peaked; expect improvement in FY15 (%)

2.3

0.7

-0.2

0.7

1.41.1 1.1

1.6

2.0 2.0

2.7

1.71.4

F Y 0 4

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4 E

F Y 1 5 E

F Y 1 6 E

Net Slippage Ratio


Significant stress accounted for; net slippages over FY11/14

as percentage of opening loans highest for SBIN (%)

697 182 152 133 115 106

37

30

27

2522

28

SBIN PNB BoB BoI CBK UNBK

FY11/14 Net slippages on FY11 book


Conservatively factored

lower recoveries and

upgrades; economic

recovery could provide

significant cushion to asset

quality



State Bank of India

28 March 2014 5

NPA peaked; expect gradual improvement

12.1

9.4

7.7

6.0

3.62.9 3.0 2.9 3.0 3.3

4.5 4.8 5.5 5.3 4.9

5.64.5

3.42.6 1.9 1.6 1.8 1.8 1.7 1.6 1.8 2.1

3.2 3.2 2.9

F Y 0 2

F Y 0 3

F Y 0 4

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4 E

F Y 1 5 E

F Y 1 6 E

GNPA (%) NNPA (%)


GNPA and NNPA highest among peers

5.5

4.7

3.8

3.3

2.8

2.7

3.3

1.0

2.4

1.4

2.2

1.5

SBIN

PNB

UNBK

BoB

BoI

CBK

GNPA (%)

2014 2011

3.2

2.5

2.2

1.7

1.5

2.4

1.6

0.8

1.2

0.3

0.9

1.1

NNPA (%)

2014 2011


OSRL lowest among peers, reflecting strategy of recognizing

stress upfront (% of loans)

0.0

5.0

10.0

1 Q F Y 1 2

2 Q F Y 1 2

3 Q F Y 1 2

4 Q F Y 1 2

1 Q F Y 1 3

2 Q F Y 1 3

3 Q F Y 1 3

4 Q F Y 1 3

1 Q F Y 1 4

2 Q F Y 1 4

3 Q F Y 1 4

SBIN PNB CBKBoB BoI UNBK


Net stress loans (NNPA+OSRL) lower than peers (%)

0.0

5.0

10.0

15.0

1 Q F Y 1 2

2 Q F Y 1 2

3 Q F Y 1 2

4 Q F Y 1 2

1 Q F Y 1 3

2 Q F Y 1 3

3 Q F Y 1 3

4 Q F Y 1 3

1 Q F Y 1 4

2 Q F Y 1 4

3 Q F Y 1 4

SBIN PNB CBKBoB BoI UNBK


Strong economic phase could lead to faster than expected recovery and aid asset quality (INR b)

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E FY15E FY16E

Opening GNPA 135 127 117 96 100 128 157 195 253 397 512 689 769

Slippages 57 43 43 50 79 111 118 181 247 320 418 394 387

Gross Slippage Ratio (%) 4.2 2.7 2.1 1.9 2.3 2.7 2.2 2.9 3.3 3.7 4.0 3.3 2.8

Upgrades & Recoveries 26 32 47 32 32 64 60 83 96 149 141 190 192

% of Opening GNPA 19.1 24.9 39.9 33.2 32.5 49.6 38.4 42.7 38.0 37.5 27.5 27.5 25.0

Net Slippages 31 11 -3 18 47 48 58 98 151 171 277 205 195

Net Slippage Ratio (%) 2.3 0.7 -0.2 0.7 1.4 1.1 1.1 1.6 2.0 2.0 2.7 1.7 1.4


Core profitability bottomed out; risk-adjusted NIM to improve

SBIN’s risk-adjusted NIM has declined to a low of 2.1%. The recent capital

infusion and increase in base rate would support NIM in the near term, while

the expected decline in net slippages would in medium term boost NIM.

Further, credit cost should decline with a lag. This could translate into strong

improvement in return ratios.

Sensitivity of NIM and credit cost to return ratios is high. With 10bp fall in credit

cost and 10bp improvement in NIM, RoA / RoE will improve by 11bp / 180bp+and earnings will see an upgrade of 18%.

Risk-adjusted NIM expected

to have bottomed out; 10bp

improvement in NIM and

10bp in decline in credit

cost could lead to earnings

upgrade of 18%



State Bank of India

28 March 2014 6

Risk-adjusted NIM has moderated significantly; should stabilize (%)

1.7

1.9

2.9

3.2

2.6

2.3 2.2

1.92.1

2.52.3

2.3 2.1 2.1

FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E FY15E FY16E Source: Company, MOSL

Sensitivity analysis suggests strong upside in earnings for every 10bp change in NIM and credit cost (INR)

Base Case10bp decline in

credit costChange

10bp

improvement in

NIM

Change Combined Impact Change

FY15E FY16E FY15E FY16E FY15E FY16E FY15E FY16E FY15E FY16E FY15E FY16E FY15E FY16E

EPS 218 260 234 279 7.6 7.3 242 288 11.0 10.8 258 307 18.5 18.1

BV 2,069 2,281 2,083 2,311 0.7 1.3 2,089 2,324 0.9 1.9 2,102 2,353 1.6 3.2

ROA % 0.6 0.7 0.7 0.7 5 5 0.7 0.7 7 7 0.7 0.8 11 11

RoE % 11.4 12.4 12.2 13.1 79 75 12.6 13.5 114 110 13.4 14.2 193 183


Dynamic management at the helm of affairs

The new Chairperson, Ms Arundhati Bhattacharya has outlined four key focus

areas (NIM, operating leverage, NPA, HR) to improve the bank’s core

profitability.

Our recent interactions suggest that the management is aggressively focusing on

improving employee and branch productivity, and controlling overhead

expenses, the benefits of which are likely to be realized with a lag.

Ms Bhattacharya’s longer tenor (three years) and willingness to moderate

growth to improve return ratios is a key positive, in our view.

Healthy earnings growth; adequate capitalization; reiterate Buy

SBIN recently raised INR100b, which led to an improvement in its CET1 capital to

~10%, one of the highest among the large PSBs. In our view, current

capitalization is sufficient to take care of 12-18 months’ growth requirement.

One of SBIN’s key strengths is its ability to maintain high share of core income,

led by higher NIM (due to high SA ratio) and relatively higher share of fees (as

compared to peers). In FY14, we expect core PPP to bottom out, as initiatives by

the new management will lead to higher fees and decline in overhead expenses.

Moreover, SBIN is already providing for retirement benefits based on LIC’s new

mortality tables that prescribe an average life expectancy of 81 years. We

believe most other banks are factoring in lower life expectancy.

Higher than expected net trading gains and decline in credit cost can provide

upside to our earnings estimates. We expect SBIN to achieve earnings CAGR of

18% over FY14-16, one of the highest among PSBs.

New management focus

remaining on NIM,

operating leverages, NPA

and HR

10.29.6

9.2

8.1 8.1

7.0

SBIN BoB PNB BoI CBK UNBK

Tier I

Better capitalized than peers

(Tier 1, %)



State Bank of India

28 March 2014 7

Fee income growth has moderated; now a focus area (%)

0.8 0.8 0.8

0.9 0.9 0.9 0.91.0

1.00.9

0.8

0.7 0.7 0.7

F Y 0 3

F Y 0 4

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4 E

F Y 1 5 E

F Y 1 6 E

Fee income to average assets

Fee income to average assets higher than peers (%)

0.7

0.5

0.50.4

0.4 0.4

SBIN PNB CBK UNBK BoI BoB

Fee income to average assets FY14

Opex to average assets has remained sticky for SBIN (%)

1.5 1.6 1.6 1.7 1.51.2 1.2 1.3 1.3 1.3 1.3 1.4 1.3 1.2

0.6 0.7 0.7

0.80.7

0.7 0.7 0.7 0.7 0.7 0.8

0.80.8 0.8

F Y 0 3

F Y 0 4

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4 E

F Y 1 5 E

F Y 1 6 E

Employees Other Opex

Opex to average assets significantly higher than peers (%)

1.4

1.3

1.0

0.8

0.8

0.7

0.8

0.6

0.6

0.5

0.5

0.5

SBIN

PNB

UNBK

CBK

BoI

BoB

Employee Other Opex

Contribution of non-core income has declined (%)

0.7

1.1

0.8

0.6

0.4 0.4

0.60.5

0.4

0.20.3 0.3 0.3 0.3

F Y 0 3

F Y 0 4

F Y 0 5

F Y 0 6

F Y 0 7

F Y 0 8

F Y 0 9

F Y 1 0

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4 E

F Y 1 5 E

F Y 1 6 E

Non-core income


Earnings CAGR over FY14-16 (%)




State Bank of India

28 March 2014 8

Core operating profitability likely to have bottomed out; expect gradual improvement (%)

FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E FY15E FY16E

Net Interest Income 2.7 2.9 3.2 3.28 2.84 2.64 2.48 2.35 2.86 3.38 3.06 2.94 2.85 2.81

Fee income 0.8 0.8 0.8 0.92 0.91 0.92 0.90 0.96 1.02 0.95 0.79 0.72 0.70 0.69

Fee/Net Income Ratio 19.2 16.8 17.0 19.14 22.22 23.17 22.70 25.06 24.08 21.01 18.99 18.13 18.07 18.15

Core Operating Income 3.5 3.7 4.0 4.20 3.75 3.57 3.38 3.31 3.88 4.33 3.85 3.66 3.55 3.51

Operating Expenses 2.1 2.4 2.3 2.46 2.23 1.96 1.86 2.01 2.02 2.04 2.02 2.23 2.11 2.04

Employee cost 1.5 1.6 1.6 1.70 1.50 1.21 1.16 1.26 1.34 1.33 1.27 1.42 1.29 1.19

Other opex 0.6 0.7 0.7 0.76 0.73 0.75 0.70 0.75 0.69 0.71 0.75 0.81 0.82 0.84

Core Operating Profits 1.3 1.3 1.7 1.74 1.52 1.61 1.52 1.29 1.86 2.29 1.83 1.43 1.44 1.47

Other Income (ex fees) 0.7 1.1 0.8 0.63 0.36 0.42 0.60 0.52 0.37 0.18 0.32 0.32 0.32 0.32

Operating Profits 2.1 2.4 2.5 2.37 1.89 2.03 2.13 1.82 2.23 2.47 2.14 1.75 1.76 1.79

Provisions 0.7 1.2 1.0 0.92 0.45 0.41 0.44 0.44 0.91 1.02 0.77 0.82 0.81 0.81

NPA provisions 0.9 0.9 0.3 0.03 0.27 0.31 0.29 0.46 0.74 0.90 0.73 0.65 0.73 0.74

Other Provisions -0.3 0.2 0.8 0.89 0.18 0.10 0.15 -0.02 0.17 0.12 0.03 0.17 0.08 0.08

PBT 1.4 1.3 1.5 1.45 1.44 1.62 1.68 1.38 1.31 1.44 1.38 0.94 0.95 0.98

Tax 0.6 0.3 0.5 0.52 0.58 0.58 0.60 0.47 0.59 0.53 0.40 0.29 0.30 0.31Tax Rate 41.0 26.0 34.0 36.19 40.45 35.54 35.68 34.18 44.73 36.66 29.30 31.50 31.50 31.50

RoA 0.8 0.9 1.0 0.92 0.86 1.04 1.08 0.91 0.73 0.91 0.97 0.64 0.65 0.67

Leverage (x) 21.8 20.9 19.6 18.44 18.00 16.04 15.76 16.37 17.56 17.54 16.40 16.30 16.73 17.73

RoE 18.0 19.7 19.4 17.04 15.41 16.75 17.05 14.87 12.75 16.05 15.94 10.44 10.89 11.89




State Bank of India

28 March 2014 10

Financials and Valuation



State Bank of India

28 March 2014 11

N O T E S



State Bank of India

28 March 2014 12

Disclosures

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Disclosure of Interest Statement STATE BANK OF INDIA

1. Analyst ownership of the stock No 2. Group/Directors ownership of the stock Yes

3. Broking relationship with company covered No

4. Investment Banking relationship with company covered No

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Promotion) Order 2005 (referred to as "investment professionals"). This document must not be acted on or relied on by persons who are not investment professionals. Any investment or investment activity

to which this document relates is only available to investment professionals and will be engaged in only with such persons.

For U.S. Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United

States. In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under

applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services

described herein are not available to or i ntended for U.S. persons.

This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major

institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only

available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange

Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional I nvestors based in the

U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this

report will have to be executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-

dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by aresearch analyst account.

For SingaporeMotilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial

Advisors Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed

in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.

In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:

Anosh Koppikar Kadambari Balachandran

Email:[email protected] Email : [email protected]

Contact(+65)68189232 Contact: (+65) 68189233 / 65249115

Office Address:21 (Suite 31),16 Collyer Quay,Singapore 04931

Motilal Oswal Securities LtdMotilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025

Phone: +91 22 3982 5500 E-mail: [email protected]

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